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ASIA RATES: KORIBOR Curve Inverts Further Ahead Of BoK Policy Decision

ASIA RATES
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South Korean sovereign bonds have cheapened sharply in recent days ahead of tomorrow’s Bank of Korea (BoK) policy decision, primarily due to a rise in global rates following last Friday’s US non-farm payrolls data rather than a change in expectations for domestic policy.  

  • Although last week’s CPI data shifted consensus toward a 25bp cut tomorrow, the market has been pricing in an aggressive easing cycle for some time.
  • The KORIBOR curve (1-month vs. 12-month) continues to bull-flatten to historically inverted levels, even with a cut tomorrow likely.
  • At -25bps, the curve is now substantially lower than mid-2019 levels, just after the BoK began its previous easing cycle. 

 

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South Korean sovereign bonds have cheapened sharply in recent days ahead of tomorrow’s Bank of Korea (BoK) policy decision, primarily due to a rise in global rates following last Friday’s US non-farm payrolls data rather than a change in expectations for domestic policy.  

  • Although last week’s CPI data shifted consensus toward a 25bp cut tomorrow, the market has been pricing in an aggressive easing cycle for some time.
  • The KORIBOR curve (1-month vs. 12-month) continues to bull-flatten to historically inverted levels, even with a cut tomorrow likely.
  • At -25bps, the curve is now substantially lower than mid-2019 levels, just after the BoK began its previous easing cycle. 

 

Keep reading...Show less